Exercise 13-8 Here are comparative balance sheets for Velo Company. VELO COMPANY
ID: 2485572 • Letter: E
Question
Exercise 13-8
Here are comparative balance sheets for Velo Company.
VELO COMPANY
Comparative Balance Sheets
December 31
Assets
2017
2016
$ 73,400
$ 33,100
86,000
71,500
170,300
186,900
72,600
100,000
260,500
199,300
(65,700
)
(33,700
)
$597,100
$557,100
Liabilities and Stockholders’ Equity
$ 35,300
$ 46,500
150,600
204,000
216,200
175,500
195,000
131,100
$597,100
$557,100
Additional information:
Prepare a statement of cash flows for 2017 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000).)
VELO COMPANY
Statement of Cash Flows
VELO COMPANY
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash$ 73,400
$ 33,100
Accounts receivable86,000
71,500
Inventory170,300
186,900
Land72,600
100,000
Equipment260,500
199,300
Accumulated depreciation—equipment(65,700
)
(33,700
)
Total$597,100
$557,100
Liabilities and Stockholders’ Equity
Accounts payable$ 35,300
$ 46,500
Bonds payable150,600
204,000
Common stock ($1 par)216,200
175,500
Retained earnings195,000
131,100
Total$597,100
$557,100
Explanation / Answer
Satement of Cash Flow of VELO Company SNO Particulars Amount($) A Net Income 101,200 B Add:Non Cash Item Depreciation 32,000 C Changes in working capital Less:Increase in account receivable (14,500) Add:Increase in Inventory 16,600 Less:Increase in accounts payable (11,200) a) Cash Flow from operating activities 124,100 b) Cash Flow from investing activities Add:sales of Land 27,400 Less:Purchase of Equipment (61,200) Cash Flow from investing activities -33,800 c Cash Flow from financial activities Less:Bonds Payable -53,400 Add:Issue of common stock 40,700 Less:Dividend Payable -37,300 Cash flow from financing activiies -50,000 d Net Cash inflow/(outflow)(a+b+c) 40,300 Add:Opening cash balance 33,100 Closing cash balance 73,400
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